12 .	SHARE-BASED COMPENSATION:

The Company has

one

active stock incentive plan for employees and directors, the

2007

Stock Incentive Plan, which provides for awards of stock options to purchase shares of common stock, stock appreciation rights, restricted and unrestricted shares of common stock, RSUs and PSAs. In addition, the Company has

one

inactive stock option plan, the

1995

Stock Option Plan for Nonemployee Directors, under which previously granted options remain outstanding. The plans provide that options become exercisable according to vesting schedules, which range from immediate to ratably over a

-month period. Options terminate

ten

years from the date of grant. The plans also provide for other equity instruments, such as RSUs and PSAs, which grant the right to receive a specified number of shares over a specified period of time. RSUs are service-based awards and vest according to vesting schedules, which range from immediate to ratably over a

three

-year period. PSAs are service-based awards that vest over a

three

-year period and have a market-based payout condition. Vesting of the market-based PSAs is dependent upon the performance of the market price of the Company’s stock relative to a peer group of companies. The following table summarizes share-based compensation expense recorded (in thousands):

	Year ended December 31,
	2016		2015		2014

Cost of sales	$	422	$	412	$	337
Selling, general and administrative expense		1,379		1,362		2,609
Total	$	1,801	$	1,774	$	2,946

As of

December

31,

2016,

unrecognized compensation expense related to the unvested portion of the Company’s RSUs and PSAs was

$1.0

million, which is expected to be recognized over a weighted average period of

1.0

year.

There were no options granted during the years ended

December

31,

2016,

2015

2014.

There were

557,098

shares of common stock available for future issuance under the Company’s stock compensation plan as of

December

31,

2016.

Stock Options Awards

A summary of option activity under the Company’s stock option plans as of

December

31,

2016

and changes during the year then ended is presented below:

	Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
						(in years)		(in thousands)
Balance, December 31, 2015		28,000		$	25.21
Options granted		-			-
Options exercised		-			-
Options canceled		(2,000	)		28.31
Balance, December 31, 2016		26,000			24.97
Exercisable, December 31, 2016		26,000			24.97		3.03	$	-

The total intrinsic value, defined as the difference between the current market value and the grant price, of options exercised during the years ended

December

31,

2015

and

2014

was approximately

$0.

No options were exercised in

2016.

Restricted Stock Units and Performance Share Awards

The Company estimates the fair value of RSUs and PSAs using the value of the Company’s stock on the date of grant, with the exception of market-based PSAs, for which a Monte Carlo simulation model is used. There were no PSAs granted during the years ended

December

31,

2016

2015.

The assumptions used in the Monte Carlo simulation model for PSAs granted during the year ended

December

31,

2014

were as follows:

Expected stock price volatility	23.7%	-	65.0%
Risk free interest rate	0.61%
Expected dividend yield	0%

A summary of activity under the Company’s RSUs and PSAs as of

December

31,

2016

and changes during the year then ended is presented below:

	Number of RSUs and PSAs (1)			Weighted Average Grant Date Fair Value

Unvested RSUs and PSAs at December 31, 2015		127,852		$	38.87
RSUs and PSAs granted		169,583			9.50
Unvested RSUs and PSAs canceled		(63,432	)		36.96
RSUs and PSAs vested		(12,212	)		31.50
Unvested RSUs and PSAs at December 31, 2016		221,791		$	17.36

(1)

The number of shares disclosed in this table are at the target level of

100%.

The unvested balance of RSUs and PSAs as of

December

31,

2016

includes approximately

47,000

PSAs at a target level of performance. The vesting of these awards is subject to the achievement of specified market-based conditions, and the actual number of common shares that will ultimately be issued will be determined by multiplying this number of PSAs by a payout percentage ranging from

200%.

The weighted average grant date fair value of RSUs and PSAs granted during the year ended

December

31,

2014

was

$41.76.

RSUs or PSAs were granted during the year ended

December

31,

2015.

The total fair value of RSUs and PSAs vested during the years ended

December

31,

2016,

2015

and

2014

was

$0.1

million,

$1.6

million and

$3.5

million, respectively.

Stock Awards

For the years ended

December

31,

2016,

2015

and

2014,

stock awards of

27,640

shares,

10,464

shares and

9,150

shares, respectively, were granted to non-employee directors, which vested immediately upon issuance. The Company recorded compensation expense based on the weighted average fair market value per share of the awards on the grant dates of

$9.95

2016,

$21.02

2015

and

$36.00

and

$36.41

2014.